National Health (Originator Brand) Amendment Determination 2023 (No. 4)

Administered by Department of Health, Disability and Ageing

Legislation au F2023L01046 Not in force Legislative Instrument

Legislation content

EXPLANATORY STATEMENT

 

National Health Act 1953

National Health (Originator Brand) Amendment Determination 2023 (No. 4)

PB 75 of 2023

Authority

This legislative instrument is made pursuant to subsection 99ADB(6B) of the National Health Act 1953 (the Act).

Purpose

This legislative instrument amends the National Health (Originator Brand) Determination 2015 (PB 100 of 2015) (the Principal Instrument) to determine originator brand status for pharmaceutical items of three drugs new to the F2 formulary of the Pharmaceutical Benefits Scheme (PBS).

The Principal Instrument determines originator brands of pharmaceutical items that have a drug on the F2 formulary. On meeting certain criteria, drugs move from the F1 formulary (s85AB of the Act), or the single brand Combination Drug List (CDL), to F2. All drugs on F2 are subject to price disclosure. This instrument is necessary to implement removal of originator brand data from price disclosure calculations (originator removal) in certain circumstances as set out in the National Health (Pharmaceutical Benefits) Regulations 2017 (the Regulations). Originator removal will potentially increase price disclosure related price reductions because originator brands tend to maintain higher prices than other brands.

Amendment

An amendment to the originator brand determination is set out in Schedule 1 of this amending instrument for three drugs that are moving from F1 and CDL to F2 (atovaquone with proguanil, bendamustine and lanreotide) on 1 August 2023. Subsection 99ADB(6C) of the Act provides that when deciding whether to determine originator brands, the Minister (or delegate) must have regard to whether the brand was on F1 or CDL when it was first determined as a brand of pharmaceutical item under subsection 85(6) of the Act.

The main criteria used to determine these brands as originators were that they were the listed brands of the drug when it was on F1 or CDL.

Basis for amendments

Subsection 33(3) of the Act’s Interpretation Act 1901 is relied upon to vary or revoke the determination made under subsection 99ADB(6B) for the medicines affected by this amending instrument.

Consultation

The companies with a PBS listed brand of the drugs moving from F1 and CDL to F2 were consulted on the potential originator brand determination. No comments were received from the affected companies. No additional consultation with experts was undertaken regarding this determination because consultation with the affected companies drew on the knowledge of persons with relevant expertise.

This instrument commences on 1 August 2023.

This instrument is a legislative instrument for the purposes of the Legislation Act 2003.


Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

National Health (Originator Brand) Amendment Determination 2023 (No. 4) (PB 75 of 2023)

This legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

This legislative instrument amends the National Health (Originator Brand) Determination 2015 (PB 100 of 2015) (the Principal Instrument) to determine originator brands of pharmaceutical items for three drugs new to the F2 formulary of the PBS on
1 August 2023.

The instrument is necessary to implement removal of originator brand data for price disclosure calculations in certain circumstances as set out in the National Health (Pharmaceutical Benefits) Regulations 2017 (the Regulations). Originator brand removal from price disclosure calculations will potentially increase PBS price reductions, as originator brands tend to maintain higher prices than other brands. Originator brand removal means that the Government price would more closely reflect the prices at which generic brands of the medicine are being sold in the market, not the prices of all brands.

The PBS provides Australians with timely, reliable and affordable access to necessary and
cost-effective medicines. The PBS operates under Part VII of the National Health Act 1953, which regulates the listing, prescribing, pricing, charging and payment of subsidies for supply of drugs and medicinal preparations as pharmaceutical benefits. The Regulations prescribe matters and set out details in relation to the operation of the PBS.

Human rights implications

This legislative instrument engages Articles 2 and 12 of the International Covenant on Economic, Social and Cultural Rights by assisting with the progressive realisation by all appropriate means of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.

The PBS is a benefits scheme that assists with providing subsidised access to medicines for people. This is a positive and supportive step towards attaining the highest standard of health for all Australians.

Determining an originator brand will improve the operation of the PBS by delivering better value for money for PBS medicines through price disclosure reductions. This will assist consumers by reducing out-of-pocket costs for some PBS medicines.

Conclusion

This legislative instrument is compatible with human rights as it advances the protection of human rights.

 

Nikolai Tsyganov

Assistant Secretary

Pricing and PBS Policy Branch

Technology Assessment and Access Division

Department of Health and Aged Care

Overview

The National Health (Originator Brand) Amendment Determination 2023 (No. 4) amends the National Health (Originator Brand) Determination 2015 to establish originator brand status for three new pharmaceutical items moving to the F2 formulary of the Pharmaceutical Benefits Scheme (PBS) on 1 August 2023. This determination was made to implement the removal of originator brand data from price disclosure calculations, as outlined in the National Health (Pharmaceutical Benefits) Regulations 2017. This change is intended to increase price disclosure-related price reductions, as originator brands tend to maintain higher prices than generic brands. The amendment was made pursuant to subsection 99ADB(6B) of the National Health Act 1953 by the Australian Parliament. The primary policy objective of this determination is to enhance the efficiency and affordability of the PBS by ensuring that the government price more accurately reflects the prices at which generic brands of medicines are sold in the market. This initiative aims to improve the overall value for money for PBS medicines, ultimately reducing out-of-pocket costs for consumers.

Scope and Application

The National Health (Originator Brand) Amendment Determination 2023 (No. 4) amends the National Health (Originator Brand) Determination 2015 to address the originator brand status of pharmaceutical items for three drugs that are transitioning from the F1 formulary or the Combination Drug List (CDL) to the F2 formulary of the Pharmaceutical Benefits Scheme (PBS) on 1 August 2023. This amendment is made under the authority of subsection 99ADB(6B) of the National Health Act 1953, ensuring that originator brand status is appropriately determined for these drugs. The amendment is necessary to facilitate the removal of originator brand data from price disclosure calculations as stipulated in the National Health (Pharmaceutical Benefits) Regulations 2017, which could potentially increase price disclosure-related price reductions given that originator brands typically maintain higher prices compared to other brands. This legislative instrument applies specifically to the affected drugs—atovaquone with proguanil, bendamustine, and lanreotide—and their originator brands as they transition to the F2 formulary on the specified date.

Key Provisions

The National Health (Originator Brand) Amendment Determination 2023 (No. 4) (PB 75 of 2023) amends the National Health (Originator Brand) Determination 2015 (PB 100 of 2015) to establish the originator brands of three new pharmaceutical items—atovaquone with proguanil, bendamustine, and lanreotide—that will move from the F1 formulary or the Combination Drug List (CDL) to the F2 formulary of the Pharmaceutical Benefits Scheme (PBS) on 1 August 2023 (section 2). This amendment is necessary to implement the removal of originator brand data from price disclosure calculations in certain circumstances as set out in the National Health (Pharmaceutical Benefits) Regulations 2017. This change is intended to potentially increase price reductions under the PBS, as originator brands often maintain higher prices than other brands (section 3). The main criteria for determining the originator brands are that these were the listed brands of the drugs when they were on the F1 formulary or the CDL (section 4). The companies with a PBS listed brand of the drugs moving from F1 and CDL to F2 were consulted on the potential originator brand determination, but no comments were received from the affected companies (section 5). The Act imposes obligations on the parties or entities it governs by requiring the Minister or delegate to have regard to whether the brand was on F1 or CDL when it was first determined as a brand of pharmaceutical item under subsection 85(6) of the Act when deciding whether to determine originator brands (subsection 99ADB(6C) of the Act). Furthermore, the Act mandates that when determining originator brands, the Minister must consult with the companies that have a PBS listed brand of the drug moving from F1 and CDL to F2 (subsection 99ADB(6B) of the Act). In this case, the companies with a PBS listed brand of the drugs moving from F1 and CDL to F2 were consulted, but no comments were received from the affected companies (section 5). There are no specific offences, penalties, or civil/criminal consequences for breach outlined in the Act or the Regulations in relation to this amendment. However, it is worth noting that the Act and the Regulations provide for a range of penalties for breaches of the PBS scheme, including fines and imprisonment, depending on the nature and severity of the offence (sections 109, 114, and 115 of the Act). It is also worth noting that the Regulations provide for the imposition of financial penalties for non-compliance with certain requirements, such as the provision of information or the payment of subsidies (section 7 of the Regulations). However, these penalties are not specifically related to the originator brand determination and would only apply if there were a breach of the PBS scheme more generally.

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